A successful virus infection involves entry into the cell, uncoating, expression and replication of the genome, assembly and release of infectious virus particles, and defense against specific and non- specific host immune mechanisms. Combined genetic, biochemical, electron microscopic, and immunological approaches are being used to investigate these complex processes. During the past year, collaborative studies led to a new model of vaccinia virus assembly in which membranes of the immediate cellular compartment enwrap viral proteins and proteins and DNA. In addition, two glycoprotein components of a second wrapping membrane, which is required for virus release from the cell, were characterized. The 42kD product of the B5R gene was shown to be a class I membrane glycoprotein component of the extracellular form of vaccinia virus. Deletion of the B5R gene resulted in a highly attenuated mutant virus that was severely impaired in envelope formation and cell-to-cell dissemination. The 21 kD of the A34R gene was found to regulate the release of extracellular virions from the plasma membrane. A virion-associated protein with homology to glutaredoxin was found to have thiotransferase activity, suggesting that it may have novel roles in the virus growth cycle. The vaccinia virus-encoded complement control protein (VCP) serves as a defense against the host immune system. Studies on the action of VCP indicated that it binds C4b and C3b and interferes at several steps in the classical and alternative pathways of complement activation. An interferon defense molecule, the double-stranded DNA binding protein encoded by the E3L gene, was shown to localize within the nuclei of cells, suggesting an additional role.